Levitation

So, what is it this time? A still-soft Fed, permitted by market-set interest
rates to maintain inflationary policy despite a manufactured economic recovery?
Op/Ex? Silly (holiday) season? The hopes and dreams of millions, invested in
the venerable Dow and S&P amid signs of extreme excess in low quality bonds
and waning leadership in important markets (China, US Banking)? Whatever it
is, as I begin NFTRH64
once again on a Friday afternoon [12/18], hope is yet to even think about giving
up.

We continue to deal with the grind of what I believe is a topping process.
Now a process can go on longer than we may find convenient. Bear in mind that
the broad market performed a good 1.5 year topping process into the climax
of Q4, 2008. The longer the process takes to play out, the greater the odds
are that the eventual downside will not be a healthy 'B' type corrective leg
before another upward leg of a cyclical bull market. But we will keep that
lessening possibility in play for now.

The media is completing a transition from 24/7 doom and gloom to talking of
'the' recovery and more and more investment professionals discuss 'the' bull
market in their analysis, as if there is no longer any question. Nor do many
mainstream investment professionals tend to care why there might be
a bull market in nominal stock prices (which is an ongoing bear market as measured
in the real monetary anchor, gold), so long as the public buys their products.

I will not pretend to be unbiased, glossing over the fact that I am disgusted
at watching hope and denial ply their trade each week in the financial markets.
I am biased because I care about the why (inflation) just as I was disgusted
watching people fall for the opposite scam last year, as long term treasury
instruments - the very instruments of the debt-born recovery - were pitched
as the only hope for survival (in a deflation) at a time when the government
just happened to need its bonds benefiting from a high demand environment.

Disgust and bias are fine; I am human. But that is different from letting
such feelings get in the way of the job at hand. And the job at hand is to
preserve capital and/or increase capital no matter the hand that is dealt.
The job is to be patient and beat the bastards at their own game.

The herd is slowly aligning and gathering at the opposite end of last year's
dynamic. Investment professionals speak of "the bull market", the Investors
Intelligence newsletter writers are all-in and the majority's assumptions are
becoming ripe for disappointment.

***

NFTRH64 went on for
15-plus pages that, as happens often now that we are in the twilight of Hope
'09, pretty much wrote themselves as it looked at the status of the NAAIM
Investment Managers and Wall Street Strategists - consistent contrary indicators
- joining the already over-bullish newsletter writers in the Investors Intelligence
data.

#64 again looked at the technicals of the most critical leading/confirming
market (no, it is not the Transports), which maintains an ongoing bearish divergence
to the broad market rally that currently carries ever-more unhealthy investors
toward a would-be Full Hubris '10. Other leading sentiment indicators,
China's market, commodities and an extensive review of the gold sector - and
its coming opportunities - are also included.

2010 promises to be full of opportunity; both to increase capital and to preserve
the gains made during this year which was after all, a gift from macro inflators
in high places. There has rarely been such an opportunity to clearly define
the herd and get contrary to it.

Disclaimer:http://www.nftrh.com does
not recommend that any trading or investment positions be taken based on views
expressed on this site. If you speculate or invest it is suggested that you
consult a financial advisor qualified in your area of interest.